Is Microsoft Mismanaging XP?

I can’t wrap my head around Microsoft’s plans to phase out Windows XP.

On April 8 Microsoft will end support for this operating system which is still very popular both for the home and for businesses.

On the surface this makes a lot of sense: The program is over twelve years old, and has undergone so many patches that it has most likely become very unwieldy to the programmers who maintain it. Plus, Microsoft would like to migrate XP users to newer operating systems so that it no longer needs to release applications that are XP-compatible.

The company can focus its resources on forward-looking products by pulling the plug on older ones.

But this ignores the fact that XP is still the second most popular PC operating system, trailing Windows 7 by only 18%. That 18% is more than the combined market share of the next four contenders, each of which has less than 7% share, including Mac OS X.

The February 2014 survey by NetMarketShare.com shown in this post’s graphic found that 30% of PCs still use the Windows XP operating system. Over the past year that number has declined relatively slowly from 39%.

Ask yourself: What would you do with an aging software product that still had 30% market share? Would you end support?

Not me! Not with a loyal fan base that seems willing to stick with an old product even though newer and significantly better products are readily available. I would find a way to capitalize on these fans and turn XP into a cash cow. With such good penetration, it just makes sense to try and find some other model to make it work.

How? I would imagine that these same faithful users would be open to paying a nominal annual fee for continuing support. Those that didn’t like this option could always upgrade, as Microsoft hopes they will under its current plan.

Other software firms have had success with this approach. Typically they start with a lower fee, just below the customers’ threshold of pain, and raise it over time to compensate for attrition in the user base. The cost of continuing support (and a reasonable profit margin) are defrayed over the subscriber base. Over time customers migrate away driving increases in the price of support, a trend that accelerates over time.

As long as the support effort is profitable, then everyone is happy, users, shareholders, and the company itself.

Is this a “New Coke” moment? Remember when the world’s most popular soft drink suddenly changed its formula? In a similar move Microsoft is challenging its users’ loyalty. Why do this when there’s a better option?

It’s too late for Microsoft to reconsider, but I can only hope that next time the company thinks long and hard about alternatives before taking one that will disenchant one third of its users in its biggest market.

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